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Why CEO Pay Will Keep Rising to Even More Insanely Unjustified Levels While Ordinary Workers Get Squeezed

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Even casual scrutiny will tell you that the current ridiculous levels of CEO pay bear no relationship to anything other than their highly developed rent extraction skills.

Bloomberg reported earlier this year that the ratio of CEO pay to worker pay has increased 1000% since 1950. Fortune 500 companies pay their chieftans 204 times the level of average worker pay, versus a mere 20 times in 1950 and 42 times in 1980. Is it really five times harder to run a big company now than in 1980? It’s one thing if CEOs were the ones that had built important businesses and taken entrepreneurial risk. But the Bill Gates and Sergey Brins of this world got really rich on their shareholdings. CEOs, by contrast, inherit businesses with established franchises. And the idea that paying more buys you more talent is spurious. If you were to say that paying more for a house makes it a better house, you’d see how this rationalization is a form of magical thinking. Studies have found no correlation between CEO pay and results. Quite a few studies have found the correlation to be negative (here, here and here, for instance). And forget about the myth of the superstar CEO. Lucian Bebchuk, Martijn Cremers, and Urs Peyer analyzed what they called the CEO pay slice, which is the proportion the CEO took of the total pay of the top five execs that went to the CEO. The more the CEO took relative to the rest of the top team, the worse the company did. But CEO pay is strongly correlated with one metric: how many people they fire.

Things have gotten so bad that even the lapdog SEC has tried to tamp things down a bit by launching a new rule requiring companies to disclose their ratio of top pay to average worker compensation. But as James Surowiecki describes in a new article in the New Yorker, this measure is not only likely to be ineffective, it may well be counterproductive. It does nothing to change the perverse norm for setting CEO pay, that of benchmarking. Benchmarking sounds perfectly sensible and objective until you understand how it really works in this arena. As we wrote in 2008:

One practice that I have seen get perilous little mention is where the pay targets are set. Based on their belief of what constitutes good modern practice (influenced in no small degree by the pay consultants) most boards set general target ranges for how they would like the CEO to be paid relative to peers. The comp consultant then helps define and survey the peer group’s pay ranges, setting a benchmark for how the CEO in question is to be paid.

That all sounds fine, right? Well, except just as all the children at Lake Woebegone are above average, no board likes setting a target below peer group norms. I have heard of numerous examples of targets being set somewhere in the top half (66th percentile, top quarter, top 20%), hardly any at the mean, and none I know of below average…. If readers know of any examples of companies (other than those with substantially owned by insiders) where the target for CEO pay is below the median of comparable companies, please let me know.

So with this mechanism in place, any CEO who has fallen below median pay who is targeted to be in a higher group will have his pay ratcheted up, independent of performance, merely to keep up with his peers, This increase raises the average and creates new laggards. The comp consultants have institutionalized a leapfrogging process that keeps them busy surveying competitor reward levels and keeps top-level pay rising relentlessly.

Surowiecki cited a paper by Charles Elson and Craig Ferrere that not only confirms what we had inferred in 2008, that no board sets out to pay less than 50th percentile, and most set pay levels above that, assuring a constant ratcheting up of CEO pay levels. Even worse, a study by Ron Laschever found that some boards often used a peer group that was really a stretch in terms of size and complexity of the company, again serving to justify higher levels of compensation (note this was not just to help the CEO; it would also presumably justify higher directors’ fees as well).

Now the SEC’s assumption appears to have been that the disinfectant of sunlight, as in better disclosure, would curb these excesses. But shareholders are disenfranchised. Even large holders don’t have a big enough stake to have any real clout. Passive investors like index funds and ETFs accounted for 22% of the market in 2010. All they care about is index replication and minimizing expense ratios; they could care less who is running a company. It makes much more sense for an unhappy shareholder to sell rather than put up a fight. But investor sell stock for lots of reasons: technical signals or their more modern cousin, algos, portfolio rebalancing, missing earnings targets, a change in industry fundamentals, that any sales out of unhappiness with CEO pay or performance are lost in the noise of other trades.

Surowiecki tells us why the SEC might have made matters worse. The visibility of pay makes the benchmarking easier (as in it helps the comp consultants goose pay higher) and likely has the effect of anchoring. A $10 million pay package is seen as justified because we read out them often. But Surowiecki reports that price transparency has had perverse effects elsewhere, often where the value of the service is hard to determine and price is thus seen as a proxy for quality. Surowiecki adds other possible causes:

Some boards, in the face of much evidence to the contrary, remain convinced of what Elson calls “superstar theory”: they think that C.E.O.s can work their magic anywhere, and must be overpaid to stay. In addition, Elson said, “if you pay below average, it makes it look as if you’d hired a below-average C.E.O., and what board wants that?”…

In a host of recent cases, public disclosure of the prices that hospitals charge for various procedures has ended up driving prices up rather than down. And the psychological causes in both situations seem similar. We tend to be uneasy about bargaining in situations where the stakes are very high: do you want the guy doing your neurosurgery, or running your company, to be offering discounts? Better, in the event that something goes wrong, to be able to tell yourself that you spent all you could. And overspending is always easier when you’re spending someone else’s money. Corporate board members are disbursing shareholder funds; most patients have insurance to foot the bill….

[T]here’s something naïve about the new S.E.C. rule, which presumes that full disclosure will embarrass companies enough to restrain executive pay. As Elson told me, “People who can ask to be paid a hundred million dollars are beyond embarrassment.”

And that leapfrogging effect? It’s being used with great effectiveness against ordinary workers. Again as we wrote in 2008:

One meme I have noticed surfacing in the debate over the automaker bailout is that UAW employees are paid more than average workers.

Now in and of itself, that statement is meaningless. You need to have an idea of worker productivity to see whether that it out of whack (and for some odd reason, the bloated and highly paid management cohort almost never gets mentioned in these discussions, nor do the massive state level subsidies to the foreign transplants). Perhaps I missed it, but I do not recall seeing any longitudinal work on labor costs (that sort of analysis would help bring some badly needed facts to the table).

But why is framing the discussion around averages alone dangerous? Let’s say we collectively want to bring car worker pay down to some sort of average. That has the effect of lowering the average. You will have groups that were formerly at the average that are now above it. And if you accept the implicit logic “above average pay is bad” (fill in the blank as to why), you have a race to the bottom due to pressure on the relatively better paid to take less which puts pressure on aggregate pay.

And look at how the anti-worker effort has targeted various well-paid cohorts. The first target was members of unions at major manufacturers. Those blue-collar wages helped provide a reference point for the wages of college-educated white collar workers (as in the presumption was they should get at least comparable compensation, if not better). And you can’t attribute the wage squeezes to solely to cheap Chinese labor; for instance, middle level and senior corporate manager are often doing what would have been one and one half to two jobs fifteen years ago, and often at lower inflation-adjusted levels of pay. Similarly, retailers are squeezing down even more on workers by turning full-time jobs into part-time positions to stop providing benefits and to push pay even lower (workers who are desperate to get more hours will also accept reduced wages, working off the clock, and abusive work conditions). Remember, retailers are insulated from international wage competition. Yet this sort of wage-cutting is taking place even in high end stores that would presumably benefit from increasing income disparity.

So now you can see how the assault on public sector workers fits in. When I was young, teachers and government employees were modestly paid, but they did have job security and decent pensions. Now that the wages of well and even merely adequately paid private sector workers have been beaten down, suddenly these not all that terrific compensation levels arouse jealousy among the newly disenfranchised, who now demand that public sector workers join them in the race to the bottom. Once this sort of beggar thy neighbor attitude is institutionalized, and it has been in many circles, it’s hard to reverse. But if we are going to restore the standing of the middle class, it’s time to reject the notion of competitive pay levels which can be used to justify class warfare, and return to the older, successful model of sharing the benefits of productivity gains between workers and management, rather than having it all go to the rentiers.

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54 comments

  1. James Arnold

    Apology: I do not possess the knowledge to explicate my claim, but I think CEOs are paid their rock star wages because they are expected to engage in criminal behaviors. Granted, few are ever punished, but the potential for punishment exists. Plus, the rentier economy creates unearned piles of money which can be luxuriously distributed. Witness also the newly emerged notion that a corporation which does not engage in some criminality could theoretically be sued by its stockholders for not being aggressive enough, because the penalties for criminality are typically manageable costs (a la the Vioxx dynamic).

    1. Banger

      You win the prize! Absolutely correct though I would put it a little differently. If top CEOs do engage in clear criminal activity it isn’t real criminal activity because, before they do what they do, they have made sure they have leverage over any law-enforcement agency. These “stars” make their salaries by having connections with people in power–the CEOs, on the highest level, have their own posses in other corporations, in government and throughout society–they are, in short, feudal lords and are themselves “the law” in real terms.

  2. PaulArt

    This piece is on the mark. As a shackled slave of the private sector, someone who has traveled the oceans in search of decent job security I can tell you that I hate tenured college profs with a passion. My wife went back to school recently for a graduate degree and comes back every day with tales of supreme arrogance of tenured professors. It is really amazing how these people behave. They would be thrown out on their ear if they were in the private sector. Departments like Finance, Accounting and Business seems to breed more of this number possibly because of a healthy demand for their kind in the private sector. In the private sector they have been impervious to the H1-B assault which brought Engineering to its knees. I conjecture this is because Indian H1-B ‘body shoppers’(term of art in India for companies that ship people to USA on H1-Bs and other business visas) the rate of return on these kinds of jobs is low – too few to chase. You take Intel in Arizona, they might call for 200 Engineers in one summer of layoffs to be replaced with Indian Engineers on H1-Bs. Can you think of the same number in Finance and Marketing? There is also the fact that these fields have always been well protected by the White Caucasian minority. If you go to any silicon valley MNC, you will find that marketing and finance are peopled mostly by Caucasians. Given the massive numbers of Indians and Chinese in the Engineering ranks this should immediately strike one as odd but for some reason it has just been accepted as normal. In my 18 years in the industry (6 in Silicon Valley itself) I have reported to non-whites only once. It seems to me the corollary here is, Caucasians who choose to remain in the lower ranks of Engineering management are losers left behind by their more sagacious brethren who migrate to marketing and finance and rule the roost from there. America it seems has become the land of extremes. On the one hand we have impoverished private sector slaves and on the other we have pampered professors and Physicians and Government workers. We have all been divided and conquered. Sorry I went off the topic a little there but this is how we all think now. If I can’t have job security then you cannot too, if I can be replaced by a H1-B then you should be too.

    1. Greg R

      “If I can’t have job security then you cannot too, if I can be replaced by a H1-B then you should be too.”

      What do you tell your children when they ask about their future?

      1. Moneta

        I tell mine that the good life is not about having a McMansion. It’s about having skills that will be needed and finding those they can master and give meaning to their lives.

        Once in a while, when they get lazy, I remind them that there are a lot of kids their age in the world who want what they have and are working very hard to get it. The only reason they have more is because they are in Canada and there is no rule that says it should stay like that.

    2. diptherio

      Pampered gov’t employees? I live with a few and guess what, they live in poverty with the rest of us! Turns out, not all Government employees are pampered…maybe you want to be a little more exact in your statements. Mr. Lew, for instance, is pampered; the Forest Service employees I know are not. The same goes for physicians and professors.

      Without tenure my Marxian econ advisor probably wouldn’t have been able to keep his job. Tenure allowed him to teach what he believed to be true without having to worry about whether or not he was offending someone. Sure, some people will abuse their tenured positions, but many don’t. I’m not convinced that the solution is to ditch the system entirely.

    3. Banger

      What you are describing is the general movement towards neo-feudalism. It starts by fragmenting society by dividing us along numerous categories based on the ability of those categories to leverage power. Another way of looking at it is to describe society as a series of gangs who control various parts of the political economy. For example, the medical industry was able to politically seize power in the health-care area and no appeal to justice or reason has been able to moderate their power. The best other sectors could do is set some vague limits to their power in exchange for perpetual dominion over health-care.

      Because we are in a neo-feudal situation no real reform of any industry, unless it is politically weak, is theoretically possible. To put it another way, there is no common sense of morality, no patriotism, no appeal to compassion, and no sense of common purpose that would fuel reforms that benefit the society as a whole because the society as a whole is breaking down and there are no political forces, since the suicide of the left, that are working to put things back together.

      I suspect we will see the trend continue as various factions and gangs or the powerful start fighting over a ever-decreasing pie and will get more desperate and more willing to break laws and what is left of social morality in order to get what they need.

      Tenured professors were able to get what they needed because without tenure they were finished as a profession. As it is, when tenured professors die off and are replaced by cheaper labor the university system will continue its transformation into yet another plantation. As for the tech world, that too will continue and rigid class-structures within the industry will harden. There is no alternative and I will repeat again, there is no alternative. I have yet to see anyone here show me how there can be an alternative to feudalism.

      1. Gerard Pierce

        There is one possible alternative – cooperative enterprises. There are already successful organizations out there, but realisticly, a large number of coops can’t get the job done and fall apart. Even the competently run ones are up against professional regulation that makes it tough to compete.

        There may be people around here who know a lot more than I do, but I have no clue who makes up the 1% and what they do in support of the 0.01%. We ought to be making a list and figuring out who’s naughty or nice.

        There might be a very few among the 1% who would be willing to help build a better society – if anyone asked them nicely.

        I believe it’s possible to take it away fromthe greedy sobs, but that’s not going to happen without research and planning. The same laws that allow them to rob us blind could be our own pretection.

        We’ve got about 30M unemployed with a variety of skills and a lot of time on their hands. We’ve got enough surplus lawyers to bring any system to a halt.

        The “Occupy Money Cooperative” may be for real, or as some have charged, it may be a scam. Regardless, some kind of alternate financing system is necessary.

        There are plenty of alternatives, but it seems that things have not gotten bad enough to get us up off our butts and doing for ourselves.

        1. davidgmills

          Don’t count on the surplus lawyers. The young ones are so heavily in debt that they will be working for the man until they are past middle age. The old ones are just beat up and tired.

        2. Banger

          I agree with you. I’d love to see that movement happen. There are young radicals out there who are interested in that sort of solution but everywhere barriers since the older people are only interested in their “security” and in maximizing their investments. Sadly, in a culture that considers narcissism the highest virtue any kind of cooperative activity is doomed. I’ve been shopping that concept around for years and nobody on the left is ever intersted in that–it’s easier to complain.

          1. Gerard Pierce

            Cooperative efforts do not have to be doomed, but you need some coop members who understand how it has to work.

            Twenty or thirty years ago, I was an unpaid consultant to the Yellow Cab Coop in Denver Colorado. By the time I got involved, it was too litle, too late.

            People who are on the bottom economically are not good business managers or coop members. Every time the utilities commision approved a rate increase, the members beat up the board of directors to insure the money went into the members’ paychecks. The board members were drivers themselves and understood the members problems and were persuated even when they knew better.

            After about ten years, the cab fleet was trashed, there was no money for replacement parts and some members were running their own private package delivery activities on the side. Everyone who could tried to invent an inside job that got them out of driving. The guy running the coop newsletter was making more money that a lot of drivers.

            When they could no loger pay their bills, the lawyers got into the act and extracted the last resources of the company. End of coop.

            I always thought that if you knew enough about human nature, you could build an orginization that would work. Or maybe not.

    4. LucyLulu

      >>” Sorry I went off the topic a little there but this is how we all think now. If I can’t have job security then you cannot too, if I can be replaced by a H1-B then you should be too.”

      Not all of us think that way. Some think “If some can have job security, or a pension that can be be lived on, or obtain affordable healthcare, why can’t we all?”.

      Speaking of doctors and their stranglehold, when Canada first implemented single payer and tight price controls on reimbursement, many Canadian physicians relocated to the US in search of higher salaries. They were replaced by an influx of foreign physicians, mostly Asian. Eventually, many returned to Canada (homesick?) despite earning lower salaries than their US counterparts. Physicians are not necessarily immune to replacement by foreign workers but in a political environment where money equates to power, they (AMA) do have a built-in advantage. They are also perhaps the most influential group that has opposed single-payer, knowing it would result in lower wages, having the ability to directly influence the opinions of healthcare consumers with propaganda. Witness the recent (empty) threats of inability to accept Medicare patients if reimbursements were not raised that had Medicare recipients so alarmed. Not reported is that many have contracted rates with some insurers that are lower than Medicare, or the widespread practices of up-charging Medicare (e.g. billing a 15 minute visit as a 30 minute visit, docs that work 90 minute hours).

  3. calabi

    One thing about this, surely the race to the bottom can be tracked, I mean how long we’ve got till things get really bad.

    Similar to global warming. Inflation, profits, wage rises amongst ceos, these are all reasonably predictable metrics.

    It would be interesting to see possible predictions of what things we will be like and how long we will have.

    1. Banger

      The future is shaping up to be a neo-feudal one–I’ve been predicting this for a quarter century. Why? Because our society has been moving away from common values unless you believe money, status and power are values which I do not. These “values” drive people apart and the ultimate sort of society that emerges out of a consistent movement of separation is feudalism. At the moment various groups are collecting around powerful institutions and people. Various gangs and posses are taking shape and that trend will continue. Law, as we visualize it, is already breaking down and those entities involved in law-enforcement will become a major locus of power. We will see a lot more “street justice”, private security forces and private armies–which we see, increasingly in “failed states” which feature rule of gangs. Libya, Syria are the most obvious but many parts of Central Asia, Africa, Mexico and so on are dominated by various official and unofficial armed groups. It will and is spreading to this country.

  4. s spade

    The source of this problem is the fantasy that public company boards are actually in charge. In reality, they are hired stooges, capitalizing on false credentials (gender, race, celebrity, military rank, etc.). These clowns make a business of the directorship game, just as Congressmen make a game of politics. They get along by going along with CEO demands, and nothing will change without federal legislation so you can forget about that. As for ‘company performance’, that is created by phony accounting as much as anything else. The real losers are public stockholders, who continue to make nothing on their investments regardless of how successful the companies may become. Every institution is being systematically looted by those entrusted with its management. Might as well get used to it.

    1. s spade

      Those who need evidence of this assertion should simply google any corporate director by name and discover how many boards this director simultaneously serves. On average, they sit on five or six. Then ask yourself how many he or she would get to inhabit if he or she once bucked a CEO pay demand?

  5. vlade

    There’s a very wrong assumption that more information is always better. It’s not (the reasons are way beyond the scope of this comment, but let just say that interpretation matters at least as much as the information itself, usually more).

    I have long advocated that the only publicly traded commitment of a company should be debt w/o any voting rights, as the publicly traded shares are best (indirectly) described in Heller’s Catch 22 definition of Milo Minderbinder’s “share” – we pretend everyone has it, but majority of the benefit accrues to one (or a few) people who “manage” it.

    The current disintermediation of control is bad for everyone. Some disintermediation of control may be required, but then I’d argue that there’s little benefit to large organizations in the first place (except if you want to extract rent), as most of the benefits disappear.
    I find it funny how right fights against massive state on the base of waste, yet supports corporation that are often larger than a medium/small size state (in terms of employees, balance sheet, revenues etc.) – and organizationally, there’s b*gger all difference between the ability of either to be effective (in both cases management controls other people’s money, and has means to massage the beneficial owners with misleading messages). Same goes for left (in the same sense, unions can be a blessing or a curse), incidentally, but the difference is more poignant on right…

  6. Jack Lohman

    Political corruption is our nation’s #1 problem. The 1% give campaign bribes to keep the laws written in their favor. Free trade and outsourcing of jobs is the best example. As are tax laws. Money works! Only public funding of campaigns will reverse it. All others are little fires that result from the big one.

    1. Banger

      So? And here’s where I say that there is no way to reverse this and no theoretical path towards reform. People then will comment on how negative I am without ever showing one rational path that this process of massive corruption and social breakdown can be reversed. Nowhere have I seen a sensible plan to more the country towards reform. Maybe I’m too spaced out–if you know some sensible path to follow, let me know!

      1. Gerard Pierce

        I commented in response to your earlier post but let’s try another response. There was a time that the Quakers were blocked from education – on religious grounds. They couldn’t become lawyers or Doctors and were barred from an number of other professions.

        A few of them went into business for themselves and they tried something unique for the times – honesty.

        If you did business with a Quaker, you could count on a fair price and quality merchandise. If there was a drought, the quakers charged a fair price, not what Mr. Market would bear. If a Quaker did cheat, there was a council that would investigate and throw the crook out of the fellowship or whatever they called it.

        Word got around. Businesses run by Quakers became highly successful on nothing more than honesty.

        (Unfortunately, the world stopped discriminating against Quakers and their grandchildren went on to become lawyers and accountants.)

        1. Banger

          Great answer but no one seems to want to go there, that’s what gets me down. I’m trying in my little way.

      2. Benjamin

        So I take it you don’t have much hope for the various moves to do a state convention and amend the Constitution to achieve campaign finance reform?

  7. Salamander

    So many problems vying for the spot of “greatest problem of our age.”

    Surely the agency problem must rank among the top five?

    For our direct government, each of us should be versed in the policy platforms of a president, two senators, a congressman, a governor, state senators and respresentatives, a mayor, city councilman, right down to the sherrif. Most people I know vote for the President… maybe. I haven’t managed to do much better myself.

    This extends to the corporate structure as well. Shareholders are supposed to be policing managers, else the management team might loot them.

    In how many companies do you, your pension, and your mutual funds own shares?

    “Ah,” you say, “But wait. My share of ownership is so small compared to – say – Apple’s capitalization that my voice wouldn’t matter anyways. But the big boys have it. My state pension fund invests in the same company, and even holds a 10% stake – now that’s a real voice. The fund’s interests are mine, so I can count on the fund manager to represent my interests. I’m kind of a free rider…”

    Well, how’s that working for us? The central thesis of this post suggests it isn’t.

    It doesn’t work, period. Most of us are too busy working and raising families, just trying to keep it all together, to participate even minimally in all the ways that 18th and 19th century social structures suggest we should in order to secure our liberty.

    “A Republic if you can keep it.” Aaaaaaaand, it’s gone.

  8. Moneta

    Even buying index funds and ETFs falls into the rentier mentality.

    Even if active managers have trouble beating an index, somebody has to work and evaluate companies.

    Index funds are the ultimate piggyback. Another free lunch. The bigger place they take up, the more mispriced equities become.

    Our entire system is geared towards rewarding those who do nothing but take, take, take.

  9. Jim A

    You can tell that the Surowiecki piece is from the New Yorker by the use of the diaresis. They are almost unique in their continued use of the diaresis in naïve and Coöperate.

  10. Benedict@Large

    It seems to me that CEO pay should in some way be tied to the performance of the most junior bond issues. This is the first place you’re likely to see that the bottom is falling out of a company, and making CEOs understand that they are the FIRST ones off the gravy train when things go south is the best way to insure that things actually don’t go south.

  11. washunate

    One of our core problems is governance. Pretty much all that’s left is the soft corruption of careerism (don’t rock the boat!) and the race to the bottom of fraud. We have created a professional class of managers with no long term loyalty to either the institution being managed or the mission/customer/etc. being served.

    I think it’s very important to see the whole picture, which is that the problem is not the profit-motive or publicly traded institutions only. Compensation unattached to worker productivity has permeated all of our social institutions, from hospital chains to higher education to the criminal justice system.

    “It’s one thing if CEOs were the ones that had built important businesses and taken entrepreneurial risk. But the Bill Gates and Sergey Brins of this world got really rich on their shareholdings.”

    I also would take issue with this line of thinking. It is public policy that make the Bill Gates and Sergey Brins of the world really rich. Our out of control system of intellectual property rights alone is responsible for billions of excess wealth of the two men.

    1. Vatch

      I don’t know much about Google and Sergey Brin, but I do know that a lot of the success of Microsoft and Bill Gates is believed to be the result of copying other people’s ideas. PC-DOS and MS-DOS were based on a clone of the CPM operating system. The initial version of that clone was written by someone outside of Microsoft. Microsoft Windows was inspired by the Macintosh operating system, which was itself derived from work performed at the Xerox Palo Alto Research Center.

      People who have made a fortune in computers are standing on the shoulders of George Boole, Joseph Jacquard, Alan Turing, John Von Neumann, and Claude Shannon, along with hordes of elementary, secondary, and college teachers. No entrepreneur stands alone against the world.

      This has probably been discussed at length on NC. It’s the topic of the book Unjust Deserts, by Gar Alperovitz and Lew Daly. It’s also the topic of chapters 5 and 6 of Billionaires’ Ball: Gluttony and Hubris in an Age of Epic Inequality, by Linda McQuaig and Neil Brooks. Those chapters are entitled “Why Bill Gates Doesn’t Deserve His Fortune” and “Why Other Billionaires are Even Less Deserving”.

  12. Richard Lyon

    It’s not just the money, as insane as these levels of compensation are. It is the aura that surrounds the CEO superstars placing them above the law. It is abundantly clear that the tepid laws and regulations are not being enforced. What is needed to break this bubble is for some of these masters of the universe to follow in the footsteps of CEO Martha Stewart and hear the cell door clanging shut behind them.

      1. Adam Noel

        Law, democracy, free trade, etc were all scaffolding in the emergence of the system that is to come. What can be removed now will be as the system continues its evolution towards a new equilibrium.

        I wonder what can we done without unexpected outcomes. Our ability to change the system is not proportional to our ability to imagine ways it could be changed but is rather where intentionality still holds. If I intend to change the system through law reform… how do I know whether the laws I propose will or will not work? The sheer complexity of modern society is baffling and the forces acting within it… indistinguishable from noise. As far as I can tell we cannot affect a society like this as long as a society like this exists.

        Here’s a question from which one can start: What is the function of social media from a systems theoretical perspective? Despite the heralding of social media as a force for democracy I suspect the functionality of social media is a force used for stabilizing the existing system.

        Facebook activism exhausts residual frustration with the system. We poo-poo the enemy and all go to sleep feeling better at night. A constant stream of news flashes before our eyelids… we feel outraged… and the outrage passes. Why is it, for example, that despite all of our frustrations with the existent system that there is no signs of social change in sight? The answer of “Oh change will come” is not an answer.

        What we have is a hierarchical system in which various levels of social control are employed (social media, television, games at the bottom… worker relations, management, class relations in the middle… armed forces, military, private forces, etc at the top) and these levels of social control are used to stabilize the system that currently exists.

        Debates over whether the system is omnipotent or what not miss the underlying issues. The system does not need to be omnipotent or what not… it only needs to have a strategy more effective then the alternatives. Even if twenty percent of the world can see that parts of the system are failing they will effectively be nullified by the rest of the people that are blinded.

        The language we have to describe a post-capitalist society is not yet developed. If there is to be a post-capitalist society it must be developed. There are far more questions then answers… and quite a lot of our questions nonsensical. I think that is a good starting point. We first need to ask a lot of questions… discard the ones that do no produce answers and ask more about the ones that do.

        1. anon y'mouse

          there is no action because of the realization that, once we go down that road, people will be hurt and killed.

          as you say, it is the system itself that needs overthrow. guess who has the guns in that system? who has brainwashed half the population with rhetoric of “useless eaters” & social darwinism, and “your work is worth what we’re willing to pay you, not what you need to survive & thrive” stuff.

          half the population thinks the other half doesn’t deserve to be human. someone said 30% of the population is in “guard duty” of one kind or another. these people are trained to go into “restrain or, if necessary, kill the wild animal” mode if anyone tries to exercise their rights or individuality. they’re shooting mentally disabled old people and breaking their wrists rather than risk personal harm. it’s just so much easier.

          now that they can drone people out of the sky, how many of us want to stand up and say -we’re mad as hell & we’re not going to take it anymore-?

  13. clarence swinney

    SUNDAY
    Millions of our Republicans march into churches to worship Jesus Christ.
    The savior who spent his adult years promoting care for the least amongst thee and condemn the greedy wealthy.
    The Government is shut down and no help goes to the needy via Meals on Wheels
    or local Loaves and Fishes.
    Food Stamps have been cut.
    We are still killing innocent people in Afghanistan and Pakistan.
    The R defeated America Job Bill intended to create/save 4 million jobs.
    The R will not increase the debt ceiling even tho the deficit has been cut in half over the past five years.
    We continue to build killing machines such as drones.
    Yes! Republicans when you worship please get a conversion to care for the least amongst thee.
    Go ahead with Tea Party intent to Cut The Government and Cut the Taxes For The Rich.
    We are still in the Bush Great Recession.

    1. DolleyMadison

      Newsflash – Obama is the one droning innocents. If you think the D’s are any different form the R’s you are much more delusional than any Sunday supplicant.

    2. Propertius

      And the Dems passed both the bankruptcy “reform” bill that enslaves millions to non-dischargable student loan debt, and the ever-popular TARP – to say nothing of the Health Insurance Company Bailout Act that compels the purchase of junk private insurance at exorbitant prices without doing anything to alleviate the real health care crisis in this country.

      Honestly, OFA isn’t paying you enough to troll here, “Clarence”.

    3. rob

      Why would anyone think that what the “republicans” have done in this current century, wasn’t absolutely “co-birthed” into existence by the “democratic party leadership”, with their tacit approval of the republican “position”; and their pathetic pretense of any attempt to stop the republican charade?

      The republicans are scum, but so are the democrats.

  14. Andrew

    The defence of stratospheric CEO pay on the grounds that “you have to pay more to get better people” is easily shown to be misguided or hypocritical, since it’s never applied on behalf of wage earners. If it were a consistent and/or honest argument and not simply naked self-interest, the “pay = quality” line would likewise be used to promote higher pay for the rank and file. But when we’re talking about wage earners, suddenly pay cuts are apparently the only logical course.

    1. Banger

      Andrew, I don’t agree. American CEOs get high pay because they offer, as James Arnold said in his comment at the top, services that for others would be illegal. These people are connected–they know the fixers, the criminal gangs, the secrets that give them leverage, the insider information that they get from the networks they frequent which are largely immune from prosecution. Workers, on the other hand, can be hired and fired–there’s always someone who can fill the slot. Since selfishness is now considered a virtue, unions have been dying out and they have little leverage. Unions are the only chance workers have to have leverage and they have, in the USA, chosen to reject the whole idea of unions.

      1. Cynthia

        Labor unions used to be in both the public and private sector, now they are pretty much confined to the public sector. It also used to be the case that non-unionized workers, most of which were in the private sector, were paid slightly more than unionized workers in order to compensate them for their lousy, second-rate healthcare and retirement benefits. Now it’s the case that pay for unionized workers have surpassed the pay for non-unionized workers, even while healthcare and retirement benefits for unionized workers remain just as generous as they were prior to the dawn of Reaganomics and its quest to dismantle America’s unionized workforce.

        This huge disparage between union and non-union workers created resentment among non-union workers, and rightfully so, which recently played out in Wisconsin politics. State workers, who are all unionized, argued that if their pay, as well as their healthcare and retirement benefits, are reduced, it would make it harder for private-sector workers, most of which are non-unionized, to regain ground in terms of both pay and benefits. Most Wisconsinites didn’t buy into this lame argument and voted in elected officials who vowed to reduce state worker pay and benefits.

        Think about it, why would anyone believe that it’s still the case that all of the generous pay and benefits in the public sector will somehow spillover into the private sector? The truth is that unionized and non-unionized worker have become too disconnected from each other to ever come together and work to regain a strong and thriving middle class in America.

        Let me also mention that unionized workers at the state and local level are under assault, but I predict that unionized workers at the federal level will remain untouchable. This is mostly due to the fact that the federal government, unlike state and local governments, can print money and run up a huge deficit in order to provide generous pay and benefits for its workers.

        1. JerseyJeffersonian

          I work at a State University Law School as a support staffer, now for about 8 years. The last 3 years the management basically refused to negotiate a new contract for the union in which I am a member. This year, for the first time, my gross pay cracked $40,000. I do not stamp out widgets on an assembly line. I interact with faculty, students, and the general public regularly, in addition to performing background tasks that require creativity, initiative, and attention to detail. I work nights, predominantly from 4 PM to 12 AM, at the opposite end of the day from my wife. Any idea how corrosive that little arrangement is to preservation of a thriving relationship?

          So, no, I don’t consider myself overcompensated; I use my brain, my demeanor with those with whom I interact is important to the public face which is turned toward them, and my hours of service rather suck, but I never – NEVER – let that influence my conduct or my professional demeanor. Yep, through collective bargaining we have managed to get some affordable health care, and access to pharmaceuticals. Did I mention that I’m an asthmatic whose health always depends on judicious behavior as well as access to maintenance drugs? No? Well, consider it noted, then.

          My wife and I have cared, in succession, and in our home, for our aging parents. Her mother is now in a long term care facility, and yet we still take care of her personal needs and oversee her well-being. My father has oscillated from a critical care facility, to a rehabilitation hospital, to 6 months living under our roof (3 of which I took as family medical leave, with no pay other than a pittance of disability leave, and took care of him myself, the other 3 with assistance from paid home health aides so that I could go back to work and pay the fucking mortgage) until he got beyond our ability to safely and responsibly care for at home. Does that comport with your attitude of disdain for us greedy, self-involved public servants? There have been several more episodes of hospitalization and rehab since then, and the beat goes on to this day. But at least I have those piles, and piles of money from my scandalously overpaid job to compensate me, eh?

          If other citizens want to hate me for my princely wage, and the little bit of control over the delivery of our benefits that membership in a union have secured for us, well, I’m not apologizing for THEIR self-defeating passivity and misplaced green-eyed envy.

          Did the Koch boyz send you over here to shit on public sector workers, people who have had the foresight and the grit to ask for and hang on to a modest wage and decent working conditions and benefits? Because I can’t imagine why else you chose to spew your bile all over us, instead of questioning why all the other mooks just take it up the ass. You see, while I may answer to my superiors, the ones I REALLY work for are those whom I serve, even YOU should we cross paths, you ungracious harpy.

      2. Dipso Facto

        Banger, you’re confusing the reason why the ‘remuneration’ is stratospheric, with the ‘reasoning’ trotted out to defend it. Andrew is right.

    2. Propertius

      Andrew,

      A quick perusal of any retail outlet will convince you that neither design nor manufacturing quality matter at all to multinational corporations. You don’t need a quality workforce to produce shoddy, disposable crap that’s designed to fail within a year or two.

      1. Dipso Facto

        You’re right. But actually providing support for Andrew’s point. The ‘If you pay peanuts you’ll end up with monkeys’ defence of indefensibly fantastic CEO ‘remuneration’, is always trotted out in the media. Andrew has merely highlighted the hypocrisy of what its proponents wish to be accepted as a universal truth, in effect a conversation-stopper.

    3. Dipso Facto

      Andrew, you are dead right.

      It’s a paradox isn’t it? Competing in the fictional landscape of competitive capitalism requires both paying more and more to the lords and less and less to the lackeys. And offering less and less employment to the latter.

  15. susan the other

    Let’s give all the CEOs and financiers a good 5-cent cigar. And let’s give the rest of us a society with lots of well-paying low productivity jobs of high social value.

  16. Banger

    In general, whatever the cause, we are moving towards a much more rigid class system. It is multi-tiered and depends on how each group organizes itself. The end result is feudalism–a very complicated sort of feudalism but we’ve been moving in that direction for some time. CEOs aren’t just “managers” they are also fixers with a lot of connections and “chips” they can use. It’s like hiring a lawyer today–you always hire a law firm that has connections with the judiciary and you hire the lawyer you can’t afford if you can even less afford to lose. And “losing” nowadays, doesn’t have that much to do with the merits of the case. Thus CEOs are kind of like super-lawyers–they know the politicians, the regulators, they have probably secret information in their files and know the weaknesses of other players in the game. It’s also like a sports team–in basketball you spend a lot of money on the superstar because he will get the calls from the refs because the game is structured to highlight the superstar. This is who we are–this is America.

  17. anon y'mouse

    it is sad to see the Punisher mentality all over this thread.

    “if i can’t have it, then no one else deserves it either! and if you have it and i don’t, you deserve to have it taken away!”

    wah!

    1. JerseyJeffersonian

      Ja, not too far removed from a bunch of jealous, red-assed baboons squabbling over something that, if we all worked together, could be had by all in sufficient measure. When I see this sort of behavior, I sometimes say to my wife, “It’s enough to make you a Republican”; i.e., you may as well be honest in being a hard little knot of greed, and drop the pretense of enlightened altruism.

    2. skippy

      Old trick in the military is to hand over punishment to the mob, as if one is found out of order – all – must be punished, as a team – group.

      skippy… by a factor of 10X… they apply with zeal… the punishment a leader would… don’t want to be seen as weak in front of everyone… eh… plus one could consider it putting a hand up for the next opening above.

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